Author: Kenley Scott
Kenley Scott is a senior equity analyst and sector strategist covering the APAC region and the Energy sector. He is a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Kenley also writes the Global Sector Summary, part of the Sector Strategy service, which identifies emerging sector strength and weakness across 46 countries every week. After working as a commodities broker, Kenley joined the firm in July 2006. He has a B.S. in Statistics from the University of California, Riverside and also holds a Series 65 securities license.
ENN Energy
Key points:
- We recommend adding to positions of natural gas distributor ENN Energy as the stock is breaking out of a two-month, stage-two base.
- After trading in a slightly upward-trending channel for about two years through November 2020, its slope has since improved significantly, and it is now displaying solid leadership characteristics, including an all-time high RS line.
- Full-year 2020 results, reported today, were slightly better than expectations.
- It saw a sharp top-line recovery in H2 as four of five segments (retail, wholesale, construction, integrated) grew by double digits y/y. Margins also jumped y/y in all but one segment.
- 2021 guidance calls for 15% gas volume growth, >15% profit growth, acceleration of residential and industrial customer growth, and continued sharp integrated energy growth.
Global Sector Commentary
Key points from this report:
- Despite mixed U.S. markets (Nasdaq 7% off highs, S&P 500 2% off), other global indices are solidly trending.
- 24 of the 48 markets we track are within 2% of 52-week highs with half of those 1% or less away.
- Nearly all have substantially lower Tech/HC/Retail weightings than the U.S. We’d continue to favor looking for spots in these markets and outside of those three sectors.
O’Neil Energy/Material Weekly
European Update–Quality Growth
Global Sector Commentary
Key points from this report:
- A clear cause of value outperformance is relative growth expectations in 2021-2022 for value versus in 2020, along with much lower valuations. This is more pronounced on the large-cap side.
- See the full report for stocks above the high-end median 2021/2022 EPS growth but below median 2022 p/e ratios in each subset, large and small.
O’Neil Energy/Material Weekly
Global Sector Commentary
Key points from this report:
- Recent Nasdaq/growth correction is interesting for a couple of reasons.
- After historic outperformance versus value since 2017, sharp give-back over two weeks, but still huge net outperformer.
- First full correction in years where many other areas are still rising.
- Even in 2016, as value outperformed, the Nasdaq never corrected to this degree.
- The comparison with 2000 is interesting. In that case as well, as the Nasdaq topped in March 2000, many other areas continued to rise for another six months. Many of the same groups this time around. Good places to look for continued alpha.
- See the full report for a complete list of 88 major O’Neil Industries, and performance then versus now.
O’Neil Energy/Material Weekly
Global Sector Commentary
Key points from this report:
- U.S. and international value outperformance persisted through selloffs this week.
- Value side now leads by around 6% year-to-date.
- International value, the best performer over six months, now leads U.S. growth by 11%. Still in context of >100% outperformance by U.S. growth over five years.
- Plenty of decent acting value names from Materials, Cap Equipment, Financials, and Cyclical sectors. Very few Tech, HC, Retail names.
- See the full report for a few dozen decent setups from the U.S. (SPYV) and international (EFV) value ETFs.
